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Tax Breaks Abound in Wisconsin, but Job Growth Remains Slow

12:02 pm in Uncategorized by WI Budget Project

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Wisconsin lawmakers have cut taxes 43 times since 2011, reducing revenue by $1.9 billion over that period and limiting investments in Wisconsin’s schools, workforce, and transportation networks. Despite – or because of – the substantial tax cuts, private sector job growth in Wisconsin has been slower than the national average.

The largest tax cuts over the four year period include:

  • The income tax cut included in the 2013-15 budget, which reduced revenue by $647.9 million over this period;
  • The January 2014 property tax cut, which reduced revenue by $406.0 million;
  • A tax break for businesses hiring new employees, $134.0 million;
  • A tax cut that will nearly eliminate income taxes for manufacturers once it is fully phased in, $126.6 million; and
  • A tax cut for multi-state corporations that allows them to shift some income to states with no income tax, $126.4 million.

The Wisconsin Legislative Fiscal Bureau, a nonpartisan agency, put together a list of all the tax changes enacted since January 2011. You can read the memo here (.pdf link). In addition to the 43 tax cuts, the legislature approved 10 tax increases over this period, most of which are smaller than $5 million and take the form of eliminating or phasing out specific business tax credits.

Unfortunately, tax cuts haven’t led to job growth in Wisconsin. The rate of private sector job growth in Wisconsin has fallen significantly below that of other states since the fall of 2011, as shown in the chart below. Wisconsin simply isn’t keeping up in terms of job creation.

Not only have the tax cuts not created jobs, they have made it harder for Wisconsin to build a strong economy, by reducing the revenue that Wisconsin needs to invest in schools, transportation, safe communities, and other tried-and-true building blocks of economic growth. In 2014, tax cuts drained state coffers of $1.2 billion – about the same amount of money that the state spent on the University of Wisconsin System– in money from the General Fund. Imagine the job growth Wisconsin could sustain if we had put those resources to use making sure we have a highly-educated workforce that can compete in a global economy.

Housing Costs Out of Reach for Wisconsin Workers Earning Minimum Wage

10:59 am in Uncategorized by WI Budget Project

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NYC Raise the Wage Protest sign: "Fight for a Liveable Wage!"

At minimum wage, many workers can’t afford housing.

A worker in Wisconsin needs to earn more than twice the minimum wage to afford a typically-priced two-bedroom apartment, a new study has found. Wisconsin workers need to earn $14.76 an hour in order to afford the rent for a two-bedroom apartment. The state’s minimum wage is $7.25.

In some cities in Wisconsin, the hourly wage needed to afford a two-bedroom apartment is even higher. For example, in Kenosha, an hourly wage of $18.65 is needed to afford a typically-priced two-bedroom apartment. That means even two minimum-wage workers in Kenosha who work full time the whole year could not rent a two-bedroom apartment without having housing costs exceed 30% of their income. Other metropolitan areas in Wisconsin including Madison, Milwaukee-Waukesha, and Janesville, have housing costs that require an hourly wage that exceeds twice the minimum wage of $7.25/hour.

Unlike housing costs, the minimum wage has been frozen since 2009. That means that as rents go up, workers earning the lowest wages have increasing difficulty making ends meet. Unfortunately, there is little relief in sight — a proposal to raise the minimum wage to $10.10 at the federal level has stalled, and the Wisconsin legislature has shown little interest in passing a long-overdue increase in the minimum wage.

That’s unfortunate, because increasing the minimum wage to $10.10 would have widespread benefits in the state and would give a raise to one out of five Wisconsin workers. The vast majority of people who would get a raise are adults – eight out of ten workers who would be affected in Wisconsin are over the age of 20. Raising the minimum wage would boost the bottom lines of 112,000 Wisconsin parents, helping families work their way to the middle class.

Wisconsin lawmakers haven’t taken action to raise the state’s minimum wage, but our neighbors to the west are taking a different path.  Minnesota lawmakers have approved increasing the minimum wage to $9.50 over three years, and tying future increases to inflation. According to the StarTribune,

State officials estimate that the $9.50 base wage will put an additional $472 million in the pockets of Minnesota’s lowest-wage workers each year. Supporters say the increase in consumer spending is expected to help local businesses in communities across the state, and provide a secondary boost to Minnesota’s economy.

Raising the minimum wage would help workers find affordable housing, lift Wisconsin families out of poverty, and increase the amount of income families have to spend at businesses in the state. It’s high time for an increase in the minimum wage in Wisconsin.

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Don’t Be Kansas: Impact of Massive Tax Cuts on Kansas Offers a Warning to Wisconsin

12:04 pm in Uncategorized by WI Budget Project

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Kansas State Capitol

Deep tax cuts have devastated Kansas’ schools and social services.

Wisconsin lawmakers advocating for more tax cuts should consider the example of Kansas, a state that has pushed through enormous tax cuts and that has been held up by tax-cut proponents as a model worth replicating.

The massive tax cuts in Kansas have deepened the damage done to schools, colleges and universities, and other key services by the recession and have failed to improve Kansas’s economic performance, according to a new report from the nonpartisan Center on Budget and Policy Priorities. Kansas should serve as a cautionary tale for Wisconsin, not a model.

The tax cuts passed in Kansas are larger than the ones that have been passed in Wisconsin starting in 2011, but otherwise they share many characteristics. In both states, tax cuts helped the rich much more than most state residents, making income inequality worse. And both states have recently raised taxes on low-income families working to climb into the middle class.

We already know that a series of tax cuts in Wisconsin have done little to improve the state’s economy. Despite claims that cutting taxes would spur job creation, Wisconsin continues to lag the national and regional averages in job growth. Personal income has grown more slowly than the national average, according to new figures released this week. The loss of revenue caused by the tax cuts contributed to deep cuts in state support for schools, ranking Wisconsin among the states that have made the steepest cuts to education. This loss of investment in Wisconsin’s future workforce will have long-term damaging effects on the economy.

Like Wisconsin, Kansas has failed to receive an economic boost from tax cuts. Job growth in Kansas has been slower than the national average since the tax cuts took effect and its labor force has actually shrunk during that period. The number of new businesses in Kansas grew more slowly last year than in the year before the tax cuts took effect.

The huge tax cuts in Kansas have left the state’s schools stuck in the recession and continuing to decline. School districts across the state have had to layoff teachers and counselors, and cut programs for students since the recession hit.

Instead of following the example of Kansas, policymakers in Wisconsin should acknowledge that high-quality schools and universities as well as other key services are a crucial building block of economic growth and help make communities healthier, safer and more livable – all important factors in attracting businesses and boosting long-term growth. By focusing on tax cuts and shortchanging other priorities, Wisconsin, Kansas, and other states that follow in the same footsteps are setting themselves up for trouble down the road.

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Tax Cut Passes Wisconsin Legislature, but Tax Increase Stays in Place

2:33 pm in Uncategorized by WI Budget Project

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A dollar bill cut into shreds, with a calculator

The Wisconsin legislature’s tax cuts don’t help the working poor as much as the alternatives.

On the same day that the state Assembly passed a substantial property and income tax cut package, it declined to reverse a recent tax hike for parents who work at low-wage jobs.

The $537 million tax cut package, which diverts money that would otherwise go to the state’s rainy day fund, has already been approved by the Senate and now goes to the governor for his signature. (For more about the tax cut, read our March 4th blog post, Five Things to Know about Wisconsin’s Proposed Tax Cut Package.)  ”That’s exactly what taxpayers want — giving their money back to them rather than keep their dollars here in Madison,” Assembly Speaker Robin Vos said in this Milwaukee Journal Sentinel article.

Despite the Assembly’s enthusiasm for cutting taxes, it missed a chance yesterday to roll back a recent tax increase for families with low incomes.  The Assembly failed to advance a bill that would repeal changes made the Earned Income Tax Credit in 2011 that resulted in working parents with low incomes paying higher taxes. The bill to improve the EITC would have cost $54.5 million over two years, or about 1/10 of the amount of the larger, untargeted tax cut package.

That 2011 tax increase on low-income families is particularly harmful because Wisconsin taxpayers with the lowest incomes pay a higher share of their income in state and local taxes than taxpayers with the highest incomes.  As a result of the 2011 tax increase, a single mother who has three children and works full time at minimum wage has paid about $1,500 more in taxes over the last three years than she otherwise would have.

The budget surplus has presented Wisconsin with a number of opportunities to invest our state’s workforce needs, close budget holes, set aside money for an economic downturn, as well as roll back tax increases on working families. Instead, lawmakers have chosen to pass an unaffordable tax cut that gives a great deal of the benefit to the top earners, and digs a deep hole in the next budget.

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Jump in the Long-term Unemployed Underscores Need to Restore Federal Benefits

11:42 am in Uncategorized by WI Budget Project

Unemployment of Six Months or More Climbs by 203,000 in February

The US Capitol dome at dusk.

New figures show why Congress MUST restore long-term unemployment benefits.

The new employment numbers released Friday provide further evidence of the need to restore the federal Emergency Unemployment Compensation (EUC) program for the long-term unemployed. Although there was a little bit of positive news relating to total employment levels, the new data illustrate that the modest job growth has not eased the crisis facing the long-term unemployed. For example:

  • the total number of jobless workers who have been unemployed for at least six months grew significantly in February, climbing by 203,000 to 3.8 million people;
  • the unemployment rate ticked up to 6.7%; and
  • the labor force participation rate is one-half a percentage point below where it was one year ago.

Federal unemployment benefits for people who have been unemployed more than six months were cut off at the end of December. One argument made by the supporters of that decision is that eliminating the EUC program would reduce the jobless rate by giving the unemployed increased incentive to find work. That argument ignores the fact that UI benefits are a poor substitute for the income from employment, and the latest increase in long-term unemployment underscores the point that federal UI benefit argument weren’t holding back jobless workers.

In Wisconsin there are now almost 40,000 workers who have lost their federal EUC benefits since the end of December. If GOP members of Congress continue to block renewal of the Emergency Unemployment Compensation (EUC) program, each week an additional 72,000 unemployed workers across the U.S. who run out of unemployment benefits will be left without jobless aid, including about 1,600 more each week in Wisconsin.

The National Employment Law Project (NELP) has been collecting stories from affected individuals and families. Among the recent stories of hardship is this one from Wisconsin:

Melvin Hildreth III, 54, from Franklin, Wisconsin, lost his job last year and his benefits when federal jobless aid expired in December. He has been applying for 100 jobs a week. “This is a sad, hard time,” he wrote to the National Employment Law Project this week. “I have always worked and was very successful. I have sold everything I own. I had to move to Arizona to live with my 73-year-old father.”

A bill filed by Senator Jack Reed (D-RI) on Tuesday to reauthorize the EUC program for six months might be voted on as early as this week. His proposal is fully paid for with funds saved from the Farm Bill. The last effort to bring a reauthorization bill to a vote in Senate fell one vote short of the 60 needed to overcome a Republican filibuster.

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Can Wisconsin Grow Its Way out of a Deficit in the Next Budget?

10:09 am in Uncategorized by WI Budget Project

Perhaps, but Further Budget Cuts Are Likely to be Part of the Solution

The underside of the Wisconsin Capitol Dome

The Wisconsin Legislature is about to pass a new tax cuts bill.

It appears that the Wisconsin Legislature is on the verge of passing a slightly amended version of the Special Session tax cut bill, which uses the projected state surplus in a way that leaves the state with a “structural deficit” of about $700 million at the beginning of the next session.  The good news is that the way the Fiscal Bureau calculates structural deficits doesn’t make any estimate of revenue growth in the next biennium. The bad news is that it also doesn’t account for any spending growth, and it depends on fairly strong revenue growth over the next 15 months, which is by no means guaranteed.

Proponents of the proposed tax cuts contend that tax growth in the next biennium can be expected to surpass the amount needed to close the structural deficit.  That’s likely to be true — provided that the economic recovery doesn’t slow over the next three years, and if policymakers are prepared to once again freeze many appropriations or cut them below the levels needed to keep up with population growth and inflation.  Although fiscal conservatives congratulated themselves in 2012 for eliminating the structural deficit, many seem not to mind starting a new biennium with a potential hole in the budget, which I surmise is because they aren’t bothered by the possibility (or likelihood) of having to eliminate that hole by making deeper spending cuts.

Over the past few days there have been several pieces of economic, fiscal and international news that I think should serve as reminders that assuming significant revenue growth in the current biennium and the next one could be problematic.  At the federal level, the Bureau of Economic Analysis said Friday that real GDP growth dropped to just 2.4% in the last quarter of 2013, which compares to prior projections of 3.2% for the last three months of the year and was far below the 4.1% growth in the third quarter.  At the state level, new tax figures released Friday by the Department of Revenue show that the adjusted General Fund tax collections in January fell 2.2% compared to January 2013.

Those two pieces of news strike me as warning flags, not as alarm bells. A number of economists have suggested that the weaker figures for the federal economy were primarily the result of short term factors, such as the weather.  And because January 2013 was a strong month for Wisconsin tax collections, the comparative decline in January of this year isn’t a major surprise.  I think the more worrisome news comes from the international developments in the Ukraine and elsewhere – considering the potential economic implications of rising tensions and global instability.  In any event, all of these recent events should serve as reminders that even the Fiscal Bureau doesn’t have an infallible crystal ball, and there are risks in using projected budget balances for new tax cuts or spending increases.

Fortunately, the structural deficit that the Fiscal Bureau projects for the 2015-17 budget is smaller than numerous others in the last two decades. However, it should be remembered that some of those structural deficits increased between this point of the biennial budget and the start of the legislature’s next biennial session. And the time to take steps to reduce structural deficits is when you have higher than expected revenue projections.

Some of the other states with surpluses are taking a more cautious and responsible approach. In California, for example, Governor Jerry Brown has recommended putting much of the anticipated revenue increase into paying off state debt and building up reserves. Wisconsin lawmakers should proceed with similar caution.

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Not a Dime For Wisconsin Rainy Day Fund Despite Nearly $1 Billion Surplus

3:00 pm in Uncategorized by WI Budget Project

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A broken piggy bank with an IOU note inside

The Wisconsin rainy day fund remains underfunded despite a budget surplus.

In their eagerness to provide tax cuts, Wisconsin lawmakers have pushed aside a law aimed at encouraging fiscal responsibility that requires half of state surplus revenue be set aside for a rainy day.

When the budget surplus of nearly $1 billion over two years was announced earlier this year, it seemed likely that Wisconsin’s rainy day fund would get a much needed boost. State law requires that when revenues exceed budgeted amounts, half the additional revenue must be deposited into the state’s rainy day fund, which is used to cushion against future economic downturns. In the absence of a tax cut package, the projected level of surplus would result in an additional $443 million transferred to Wisconsin’s rainy day fund over the next two years.

Wisconsin’s rainy day fund has long been underfunded. In fact, for years that fund was nearly completely empty. Since the end of the recession, the state has been regularly depositing money into the rainy day fund when revenues have exceeded projected amounts, and Wisconsin’s rainy day fund currently has a balance of $279 million.

It is encouraging that lawmakers are finally setting aside money in this reserve fund. However, the balance in the fund is still too low to provide much of a budget cushion. There are no hard and fast standards for how much a state should have set aside in its rainy day fund, but the Government Finance Officers Association recommends that states have at a minimum of 5% to 15% of annual general revenues set aside. For Wisconsin, those guidelines mean that we should have somewhere between $750 million and $2.25 billion set aside in budget reserves – several times the amount that Wisconsin has set aside currently.

Plans for the surplus have proposed diverting most of the money that would have otherwise been deposited into the rainy day fund, and using that money for tax cuts instead. The Governor’s tax cut proposal did include a $117 million deposit in the rainy day fund over two years, but the Legislature has proposed eliminating that deposit and inserting language into the bill to exempt itself from the statutory requirement to make such a deposit. The newest version of the tax cut package, which has been passed by the Legislature’s budget committee and seems likely to be agreed upon by both houses of the Legislature, does not put any money into Wisconsin’s rainy day fund at all. Instead, lawmakers want to keep that $117 million in the state’s main account. Keeping the money in the state’s main account reduces the size of the hole in the state’s upcoming budget, because of the way that budget hole is calculated.

Keeping that $117 million in the state’s main account rather than depositing it into the state’s rainy day fund does still provide some protection against an unexpected drop in revenues. It also has the advantage of giving lawmakers an easier option for plugging a $93 million hole in the Medicaid budget, if state officials don’t find another way to close that budget gap. But it would be more fiscally responsible for lawmakers to reduce the size of the tax cuts so they don’t have to choose between adding to the rainy day fund and providing a healthier budget balance to carry into the next biennium. (Read more here about the state’s continued delays in building up the required budget balance.)

The budget surplus represents an opportunity for lawmakers to build on the progress Wisconsin has made in recent years in building up the rainy day fund. Setting aside money now, when revenues are higher than anticipated, could help the state avoid painful spending cuts or tax increases during the next recession. Instead, policymakers seem set on a course of cutting taxes without heed to setting aside money for future needs.

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Are Tax Cuts the Way to Attract Start-ups to Wisconsin?

12:43 pm in Uncategorized by WI Budget Project

Insights from a New Survey and the “Epic” Growth in Dane County

A dollar being cut with scissors

Can states attract business without corporate welfare and tax cuts?

In recent years, many policymakers have set their sights on trying to attract entrepreneurs and new start-ups to their communities and states. In some cases they have used that goal to justify tax cuts, which some lawmakers think will be an inducement for innovative entrepreneurs. Scott Walker is among the Governors who are seeking to promote development of new businesses and employing tax cuts as a tactic to pursue that goal.

But are tax cuts an effective strategy for attracting entrepreneurs and boosting the number of start-ups?  A new report adds to the evidence that reducing taxes is not what entrepreneurs are looking for, and is likely to be a counterproductive strategy. And if we turn our attention to the Dane County economy, the extremely dynamic growth of health care IT companies, led by the explosive growth of Epic, reinforces the conclusion that the playbook of conservative politicians pushing for lower taxes and reduced regulation is not what drives the growth of small businesses.

The new report was released a couple of weeks ago by Endeavor Insight – the research department of the non-profit Endeavor, which strives to foster and mentor “high-impact” entrepreneurs. Their report is based on surveys and interviews with 150 founders of some of the fastest-growing American companies. Some of the report’s key findings include the following:

  • The top rated factor by far was access to talent, which was mentioned by nearly a third of those surveyed as a key factor in their decisions for where to live and work. Many specifically cited access to technically trained workers.
  • Similarly, many said they were drawn to places with cultural amenities and a strong quality of life, which will attract a larger talent pool.
  • Two other key factors in the location choices of entrepreneurs are major transportation networks and proximity to customers and suppliers.
  • Very few said taxes were a factor.  In fact, only 5% of those surveyed mentioned low taxes.
  • A mere 2% named business-friendly regulation as a factor in their location decisions.

The report says the top business creators generally gravitate towards cities with at least a million residents in the metro area. Madison appears to be an exception in that regard, but it offers the amenities and vitality of many larger urban areas.

Another finding is that a city needs to be able to appeal to the young and the restless because entrepreneurs are highly mobile in the early phases of their careers, “following personal ties or certain lifestyle amenities while also seeking the right environment to launch their enterprises.” However, the report says 80% of respondents had lived in their current city for at least two years before starting their companies, and once they launched their first company they rarely moved.

The report concludes: “The magic formula for attracting and retaining the best entrepreneurs is this: a great place to live plus a talented pool of potential employees, and excellent access to customers and suppliers.”

I was reminded of the report’s findings when I read an article in the latest Isthmus about the tremendous boom in employment in Dane County from EPIC and the numerous health IT companies created in recent years by former EPIC employees.They are starting and expanding those businesses in the Madison area for all of the reasons cited by the entrepreneurs interviewed for the Endeavor report. Our state and local taxes and spending contribute to the quality of life, the pool of talent, and the growth of well-paid jobs in the IT sector.

Start-ups and other small businesses account for a large percentage of job growth, so it makes sense for state and local policymakers to want to assist them. But some lawmakers have a bad habit of assuming that entrepreneurs want the same low tax, small government agenda advocated by people like the Koch brothers. The Endeavor report and the health care IT growth in Dane County indicate that not only is that a mistaken assumption, it could also be a counterproductive way of trying to court new entrepreneurs and the well-paid jobs that those small businesses can generate.

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Wisconsin Legislature Bucking the Tide on Wage Laws

9:59 am in Uncategorized by WI Budget Project

In Contrast to WI, Higher Minimum Wage Has Broad Bipartisan Support in West Virginia

The West Virginia State Capitol Building

More states, like West Virginia, support increases to minimum wage.

State and local policymakers in many parts of the country are coming to the conclusion that too many workers get paid too little, and they are pushing for higher wage standards for workers.  Yet in Wisconsin an Assembly Committee moved with great speed last week to advance legislation blocking county or municipal ordinances that set a minimum wage for contractors doing work financed in part with state or federal dollars.

The new legislation, AB 750, was introduced on Tuesday, Feb. 11, then got a public hearing Wednesday and was voted on in the committee Thursday – just a week after the Milwaukee County Board voted 12 to 6 for an ordinance requiring all contractors to pay at least $11.32 an hour.  That amount was chosen in part because that was the federal poverty level in 2013 for a family of four.

The bill was developed to block implementation of that measure and a Milwaukee County residency ordinance approved almost 20 years, which aims to boost the percentage of workers on public contracts who reside within the county.  AB 750 would also invalidate or significantly restrict similar wage standards approved a number of years ago by Dane County and the City of Madison.  (Read more about the bill and committee amendment in this Legislative Council memo.)

In marked contrast to the developments in the Assembly last week, there is very strong bipartisan support for a higher minimum wage in West Virginia, where the House overwhelmingly voted on February 12th to raise the state’s minimum wage from $7.25 to $8.75 by the start of 2016.  That measure passed 89 to 5, with the support of 38 of the 43 Republican members.

The hostility of conservative Wisconsin legislators to local wage ordinances also contrasts sharply with an unusual and ground-breaking minimum wage increase approved in December in the Washington D.C. metropolitan area.  In a coordinated effort, the Washington city council and local officials in two suburban counties – Montgomery and Prince George’s counties in Maryland – all voted to increase the minimum wage to $11.50 over the next few years.  The three jurisdictions have a combined population of about 2.5 million people.  That sort of regional approach would also be precluded by AB 750.

The author of AB 750, Rep. Kapenga, and other proponents of the bill contend that when state or federal dollars are involved it is unfair to have higher wages in some parts of the state than in others.  However, some areas have higher living costs, and regardless of whether Wisconsin allows local ordinances setting minimums, there will be higher rates of reimbursement and spending in some areas of the state and the nation than others.

Another reason that the arguments for invalidating the local ordinances ring hollow for me is that I think it’s hypocritical for the state to contend there must be statewide uniformity in the minimum level of compensation for employers and contractors when our lawmakers haven’t been attempting to ensure that the state sets a livable minimum wage.

The fate of AB 750 will say a lot about whether state lawmakers are willing to help make work pay for people employed in professions like home health care.  However, it might say even more about the fate of our state’s long tradition of local control.

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Top 10 Reasons to Increase Tax Credits for Low-Income Wisconsin Households

12:56 pm in Uncategorized by WI Budget Project

1. The top 5% of taxpayers in Wisconsin will get more than 18% of the benefit from the Governor’s tax plan, whereas the bottom 40% of taxpayers will get just 15% of the benefit.1

A broken piggy bank, inside some change and an IOU note

Increased income tax breaks would help low income families.

2. The largest source of increased tax revenue contributing to the projected surplus is faster-than-expected growth in sales tax collections, which are now expected to be $350 million above the previous estimate for the 2013-15 budget. The sales tax falls most heavily on lower income taxpayers.

3. The 2011-13 budget increased taxes for low-income families by making a significant cut in the Earned Income Tax Credit (EITC) and whittling away at the Homestead tax credit by ending the practice of adjusting it annually for inflation. (Read more here.)

4. Because other factors have also reduced those credits, underspending in the EITC added $15 million to the General Fund balance at the end of fiscal year 2012-13.

5. According to the latest Legislative Fiscal Bureau (LFB) paper regarding estimated state revenue and spending, an additional $31.5 million of the projected surplus is from lower-than-expected spending for the refundable credits in 2013-15 ($8.2 million less for the EITC and $23.3 million less for the Homestead credit).

6. The state has also been building up the General Fund balance by substantially increasing the amount of federal welfare reform block grant funding being used to finance the EITC over the last few years, even as the state has decreased total EITC spending.2

7. The Homestead tax credit provides very well targeted tax relief for low-income homeowners and renters, except for one problem – unlike most of the rest of the tax code it isn’t indexed for inflation. We could easily remedy that and make it a very efficient mechanism for delivering property tax relief.

8. From 1993 to 2013, the inflation-adjusted value of the maximum Homestead credit fell 38% and the value of the average credit fell 26%.

9. From 2003 to 2013, the inflation adjusted cost of the state EITC has declined by 11% (in state and federal funding combined).

10. People across the political spectrum have lauded the effectiveness of the EITC. President Reagan called it “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”